Tag Archives: Keck

The Court of Justice of the European Union[1] (CJEU) is one of the most active judicial bodies in the world, delivering over 26,000 judgements since its creation.[2] Its impact upon Europe has been deep and pervasiveand it has influence over many different policy sectors.[3] As AG Maduro correctly identifies, the Court has engaged in systematic “majoritarian activisim”[4] in pursuance of judicial harmonisation. Moreover, the Court frequently takes a teleological approach to jurisprudence in order to achieve this objective, sometimes basing its decisions upon “the spirit” of the Treaties opposed to their literal wording.[5] The scope, motivations and approach of the Court have a compounded effect, making it incredibly potent. It is capable of creating highly creative (and sometimes unpredictable) case law which can affect a wide range of people in a broad variety of sectors. Such power has the potential to be both highly beneficial and highly damaging.

In light of this some scholars have questioned its legitimacy.[6] There is an inherent friction between Member States and the Court; as Craig and de Burcá highlight “each has locked itself into a system of review whose dynamics it cannot easily control”[7]. This is because the Court’s power of review stems from all 28 Member States who all have divergent opinions. Holding the Court to account is therefore very difficult. This poses a problem when one considers the uneasy relationship direct effect and primacy have with Member State sovereignty. However the biggest danger to the Court, and the important role it plays, is itself. As established, the stakes are very high and poor judicial decisions can have colossal ramifications.

In this article I will analyse the approach of the Court through the lens of the fundamental freedoms. I will highlight the different approaches taken in regards to free movement of goods and free movement of services and argue why the Court should follow its approach in the latter.

b. Free Movement of Goods

The bulk of the case law concerning free movement of goods can be found in relation to measures having equivalent effect to quantitative restrictions.[8] In this area the Court has repeatedly tied itself in knots and generally struggled to take a decisive approach.

In the seminal case of Dassonville[9]the scope of Article 34 TFEU was cast very wide, indeed its “potential breadth […]is striking”.[10] The Court held that “any measure capable of hindering, directly or indirectly, actually or potentially, intra-Community trade”[11]would fall within the scope of Article 34, and thus be prohibited. Case law has developed these principles, meaning that at its widest scope anything that could potentially interfere[12] with intra-Community trade, even indirectly,[13] could fall within the scope of Article 34. Evidently this was a step too far. When taken to extremes Dassonville could be used to challenge a plethora of national rules.[14] As the notorious Sunday trading cases[15] illustrate something had to be done.

Consequently, in the infamous decision in Keck, the Court found it “necessary to re-examine and clarify its case law on this matter”.[16] Some tactfully state that this is merely a refinement of the Dassonville test,[17] however as Weatherill bluntly puts it, the Court simply “changed its mind”.[18] The decision in Keck effectively created an exception for certain selling arrangements that applied equally to all measures in fact and in law. This was not completely unprecedented (drawing from academic commentary[19] and case law[20] for its inspiration) and neither was its aim undesirable.[21] In fact, the Commission was initially very positive, stating that “the Court has completed its case law”[22]as a result of the judgement.

Regardless, the decision has been very divisive. Barnard states the ruling received “brickbats and bouquets in almost equal measure”.[23] However it is important to note that the majority of said ‘bouquets’ were from Member States thankful for a curtailment of the previous law. The majority of academic opinion is critical of the case; several key problems arise from it. Firstly it purported to clarify the case law; however it said nothing about which previous cases it overruled. Secondly the distinction between product requirements and certain selling arrangements is extremely fine, a problem exacerbated by the concept of dynamic/static rules.[24] Finally, and most damaging, the concept was completely novel and signified a departure from the well-established test of distinctly applicable and indistinctly applicable measures.[25] This caused the Court a considerable headache.[26]

Thankfully the Court heeded this criticism[27] and altered[28] its decision in Keck, at least to an extent. In Commission v Italy (Trailers)[29] the Court reaffirmed another test, the market access test. It is debatable whether this is an overarching theme or merely another category of breach; however the overall result is relatively clear. If a measure fails the Keck test it will be considered automatically in breach of the market access test. If a measure passes the Keck test it will still have to pass the market access test independently. Therefore, irrespective of how a measure fares under the Keck test, it will always be considered in light of Commission v Italy (Trailers).[30] Put simply the Keck test is not as relevant as it once was, it is subsumed by Commission v. Italy. There are now three types of measures which will fall foul of Article 34, distinctly applicable measures, indistinctly applicable measures and measures which prevent access to the market.

The market access test, however, is not perfect; there is some uncertainty as to its scope, with criticism present well before Commission v Italy (Trailers).[31] In Leclerc-Siplec[32]AG Jacobs stated that such a test could risk encompassing too much national regulation (as with Dassonville) and that therefore a minimum threshold criterion should be established. This may be a feature of the test, as the Court did use the phrase “considerable influence”[33] in the ruling; however this has not yet been resolved. Barnard states[34] that this concept of a threshold is at odds with the de minimus rulefound in cases such as Bluhme.[35] This ignores the huge variation in barriers to the market that can arise; therefore such a threshold remains useful.

Although the exact scope of Article 34 TFEU is now almost fully defined, it is clear that the method the Court used to get to this position is flawed. The scope of the test fluctuated wildly throughout the years and no one test was applied consistently. This has resulted in a very messy series of decisions. The law concerning free movement of goods is unnecessarily convoluted.

c. Free Movement of Services

The Courts approach in regards to free movement of services is much preferred over the approach outlined above. In contrast to the relatively straightforward cases in regards to goods[36] the Court faced the problem of defining exactly what a service was, particularly considering the vague wording in Article 57 TFEU.[37]

Despite this the Court took a purposive and consistent approach to the matter. For the purposes of Article 56 TFEU,[38] a service is a self-employed activity provided for remuneration on a temporary basis with a cross-border element. Even though the Court has cast the scope fairly wide, especially in regards to the definition of remuneration[39] and the cross border element[40] there has not been the problems encountered with free movement of goods. This is because the Court has considered its approach and has thus been consistent when applying it. By avoiding the excessively broad statements that are present in cases like Dassonville the Court removes the need for correction further down the line.

Furthermore in regards to which measures are caught by Article 56, the Court has again been consistent. It has not sought to apply different tests or experiment with new concepts; rather it has taken a structured approach. The measures falling within the scope of this provision mirror that of the free movement of goods, but without the entire Keck fiasco. Distinctly applicable measures[41], indistinctly applicable measures[42] and measures which prevent access to the market[43] are all caught by the provision.

Free movement of services is arguably much more complex than free movement of goods, due to the human element it inherently incorporates. This freedom affects not only the provision of services, but those who deliver them. Consequently the stakes are much higher; any alteration to this framework will have an impact upon the flow of citizens between Member States. However due to the Court’s consistent and restrained approach it has managed to pursue the overall aim of a free market[44] without any of the complications encountered above.

d. Conclusions

It is evident that the Court is an extremely powerful and influential institution of the EU; it has the power to shape events across many countries. Considering this, and the inherent friction such an institution has with Member States, it is of utmost importance that the Court’s decisions are of the highest standard. It has been evidenced that the Court can err, especially when determining the scope of Treaty provisions and choosing which principle to apply. However it has also been shown that the Court can operate in a consistent and purposive manner, ensuring that the aims of the EU are carried out through case law. This is the approach that should be, and largely has been taken by the Court. However as the Court’s jurisdiction strays into more and more litigious areas, such as human rights and citizenship, it is crucial to remember the lessons learnt when developing the freedoms to ensure such mistakes are not made again.

In the 1990s the European Court of Justice (ECJ) established a distinction between the product requirements and certain selling arrangements in the case of Keck and Mithouard.[1] A few years ago in Trailers[2] the ECJ declined to extend Keck to user arrangements and declared that a measure will be classified as a measure having equivalent effect to a quantitative restriction if it hinders access to the market. Though Keck has not been specifically overruled does this market access test mean that Keck has been abandoned? This post will examine whether the market access test has indeed overtaken the Keck certain selling arrangements exception or whether the tests actually deal with separate situations. There is an argument that the phrasing used in Trailers actually excluded product requirements and certain selling arrangements from the market access test.[3] It is also possible that the market access test only applies when the measure is discriminatory whereas certain selling arrangements only apply to indiscriminate measures.[4] These arguments will be explained and critiqued here.

Pre-Keck

Before jumping straight into the Keck case it is necessary to give a bit of background as to why it was decided. As is well known, in the case of Dassonville[5]the ECJ defined a measure having equivalent effect to a quantitative restriction (MEQR) as ‘all trading rules enacted by member states which are capable of hindering directly or indirectly, actually or potentially intra-community trade.’ This is a very wide definition and a trend started with opponents of regulation attacking national rules in view of EU law compliance. Thus Member State competence to impose any regulation was severely limited. A good example of this is the Sunday Trading case law which challenged the limits on Sunday trading hours imposed in the UK.[6] Eventually the ECJ declared that these rules could be justified by socio-cultural reasons but by that point the UK Parliament was already under huge pressure to change the law.

The Keck Case

The Keck case concerned traders selling goods at a loss which contravened French law. The traders argued that this prohibition restricted a method of sale promotion and so was a MEQR. The ECJ noted ‘the increasing tendency of traders to challenge national rules’ and drew a distinction between product requirements and certain selling arrangements (CSAs). Product requirements would always fall within the scope of EU law and have to be justified but CSAs. So long as the CSAs applied equally to all traders in the national territory and had the same effect on all traders in law and in fact, fell outside the scope of the Treaty. This French prohibition was a CSA and so was not prohibited under EU law. The Keck case was applied again in Leclerc-Siplec[7] where the TV advertising of fuel distributors was prohibited and was found to be a CSA. After that Keck was not successfully used again in front of the ECJ[8] but more recently a body of case-law concerning ‘user arrangements’ came before the ECJ – where these certain selling arrangements?

User Arrangements

In the Trailers case an Italian rule prohibited motorcycles, mopeds, bicycles etc. from pulling trailers thus there was effectively a ban on a certain type of trailer. The ECJ found that the rule did not discriminate with regard to origin but in fact only imports were affected as no trailers were manufactured in Italy. The ECJ identified three situations where a rule could be regarded a MEQR.

Where the object/effect of the measure is to treat products from other member states less favourably than domestic products.

When a measure requires goods lawfully made in another member state to meet another condition even if it applies to all products indiscriminately.

Any other measure which hinders the access of products originating in other member states to the market.

The third situation applied here as the prohibition on the use of the product would have a big impact on consumer behaviour which will affect demand for the product. However this could be justified under the mandatory requirement of road safety.

A second user arrangement case emerged soon after. In Mickelsson and Roos[9] two people were caught riding jet skis on a body of water where the use of watercraft is prohibited by Swedish law. The ECJ did not even refer to Keck but went straight to the definition of a MEQR provided in the Trailers case. It found such a limitation would hinder access to the market as it would deter consumers from buying the product but it could be justified on the grounds of the protection of health and life of plants and animals and environmental protection.

Market Access vs. Keck

Though Keck has not been specifically overruled, has it been abandoned in favour of a market access test? Perhaps not as there is an argument that the phrasing used in Trailers exempts CSAs from the market access test.[10] The ECJ reiterates that discriminatory measures and product requirements are always prohibited by Article 34 and that CSAs are only prohibited in so far as they are discriminatory. Then the ECJ states ‘Any other measure which hinders the access of products originating in other Member States to the market of a Member State is also covered by that concept [MEQR]’ The phrase ‘any other measure’ is confusing, since it is not clear whether it refers to the a measure which is not a discriminatory measure, a product requirement or a CSA? Or does it refer to any non-discriminatory measure – including CSAs?

If it is the former situation, then the market access test may be said to apply to residual rules. Residual rules are those rules which cannot be classed as a product requirement nor can they be considered product requirements but which affect the sale of a product. Some examples are a requirement to report data, restrictions on the transport of the product and indeed prohibitions on the use of the product. However this reading of the judgement is not without its problems. The most prominent being that, given the nature of residual rules, it does not make much sense in the internal market. Why would the court exclude CSAs from the market access test when they are likely to have bigger impact on the sale of the product than a residual rule? CSAs govern where, when, how and to whom the product may be sold – factors far more likely to affect trade than a requirement to provide data. There is also a potential for overlap between CSAs and residual rules, for example a requirement not to sell cigarettes to under-18s would be both a CSA (to whom) and a residual rule (prohibition on use).

Another argument which suggests that Keck has not been abandoned is the idea that the market access test only applies when a measure is discriminatory.[11] In order for a CSA not to be caught by Article 34 TFEU it must fall equally on all traders in the national territory and affect the same in law and in fact – in other words it must not be discriminatory. If a measure is not discriminatory because it affects all traders equally then it surely follows that there is no market access problem. Any trader trying to break into the market faces the same obstacles as any other. This is a more convincing reading. Although this argument does not seem to stand up against the ECJ case law, a prohibition on trailers for mopeds, for example, would affect any company attempting to start such a business in Italy as well as those from other Member States. In other words it fell equally on all traders but there were simply no traders from Italy. Thus the discrimination distinction seems also to be problematic.

Conclusion

Has Keck been abandoned then? Maybe seems to be the only possible answer. This whole area of EU law has been encased in uncertainty for a long time. The refusal of the ECJ to clear up the situation seems bizarre given the obvious potential consequences for both member states and traders. The two explanations outlined above are not without their problems but their adoption by the ECJ would not be all that surprising. It would not be the first time the Court has engaged in strange and contradictory logic.[12] Until the Court chooses to clarify the situation however, traders and Member States will have to deal with the legal uncertainty.

[8] Although there is an argument that there are ‘hidden uses’ of Keck in ECJ cases Case 384/93 Alpine Investment ECR I-1141; Case 51/96 Christelle Deliege ECR I-2549; Case 544/03 Mobistar ECR I-7723but this is outside the scope of this paper.

When in November 1993 the CJEU presented its ruling in Keck case[i], seeking, inter alia, ‘to clarify the law’, academic society reacted to it with a plethora of studies on how to ‘clarify the clarification’[ii]. In that ruling the Court held that French rules prohibiting reselling at loss were not caught by Article 34 TFEU since they related merely to indistinctly applicable ‘selling arrangements’ having no adequate effect on intra-EU trade.

It was clear that the judgement signalled contradiction in the scope of application of EU rules on free movement of goods. As noted by prof. Weatherill, Keck was doubtless intended to empower national courts to dismiss far-fetched attempts to deploy internal market law which was clogging up the EU judicial system with the minutiae of purely local affairs[iii]. However, the borders of such limitation and its content remain blurred until today.

The analysis below will re-think Keck from the position of market access test. It firstly shortly examine the nature of ‘selling arrangements’ introduced by Keck, and later will turn to the discussion on the market access test as an alternative approach to Keck.

Restrictive measures falling under Keck

According to the settled case-law, all trading rules enacted by the Member States which are capable of hindering, directly or indirectly, actually or potentially, trade within the EU are to be considered as measures having an effect equivalent to quantitative restrictions and are, on that basis, prohibited by Article 34 TFEU[iv]. However, according to Keck, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements, within the Member State of importation, is not such as to hinder trade between Member States so long as, first, those provisions apply to all relevant traders operating within the national territory and, secondly, they affect in the same manner, in law and in fact, the marketing of domestic products and those from other Member States.

Following the above, while retaining the prohibition of hindrance to market access set in Dassonvilleand the general non-discrimination requirement, Keck made a distinction between:

(i) ‘rules that lay down requirements to be met by goods’, related to inherent characteristics of products, and per se are considered to fall under Article 34 TFEU;

(ii) ‘selling arrangements’, regulating questions extrinsic to goods. They are covered by Article 34 TFEU only if they discriminate against imports;

(iii) ‘residual rules’, as a separate group named in subsequent case-law and doctrine. They fall under Dassonville as affecting intra-EU trade.

Identifying selling arrangements, however,appeared to be a puzzle. Although they seem to cover restrictions on when[v], where and by whom[vi] the goods may be sold, as well as advertising restrictions[vii] and price controls[viii], these general elements hardly allow predicting outcomes in individual cases.

It should also be noted that during last decades the Court increasingly adopted a broad interpretation of indirect discrimination bringing the rules on marketing within the scope of Article 34 TFEU. Indeed, as stated by prof. Spaventa, aside from Sunday-trading type of rules, during the period of 1997-2008, there were only two cases – Burmanjer and A-Punkt – where selling arrangements were found to be non-discriminatory and thus fell outside the scope of Article 34 TFEU[ix].

Market access test as an alternative to Keck

Since Keck received a lot of criticism, there were considerable attemps to reformulate it and to suggest alternatives. The majority suggested market access test to be the panacea.

As Oliver and Enchelmaier[x] note the most authoritative assault ever mounted against the reasoning in Keck was that of AG Jacobs in Leclerc-Siplec[xi]. He considered that it was inappropriate to make such a rigid distinction between “rules that lay down requirements to be met by goods” and ‘selling arrangements’, and that the test of equality is not in line with the objectives of the Treaty[xii], namely, the establishment of a single market. At the same time AG Jacobs suggested a test aimed at checking whether a measure exerts a substantial restriction on the market access[xiii]. Since Leclerc-Siplec related to partial ban on advertisement (TV advertising), he came to a conclusion that this did not amount to substantial restriction of the market access. However, he also offered an example of direct TV marketing: here prohibition of TV advertising would mean substantial restriction. Comparably, in his opinion in Alpine Investments[xiv] dealing with restriction on ‘cold calling’ potential clients offering financial services, AG Jacobs argued that a question whether a national rule restricts freedom to provide services “should be determined by reference to a functional criterion, that is to say, whether it substantially impedes the ability <…> to provide services”.

Prof. Weatherill[xv] chose another direction stating that prohibition to resale at loss in Keck escaped Article 34 TFEU not because these were rules affecting selling arrangements applied equally in law and in fact, but because they were measures applying equally in law and in fact and exercising no direct impediment to access to market of a Member State. There was no obstruction to the realization of economies of scale and wider consumer choice. Going further, prof. Weatherill also sugests refining Keck test along the following wording: measures introduced by a Member State which apply equally in law and in fact to all goods or services without reference to origin and which impose no direct or substantial hidrance to the access of imported goods or services to the market of that Member State escape the scope of application of Articles 34 and 66 TFEU. Following such suggestion, complete bans on sale of goods or services (as in Schindler[xvi]), even if equally applied, would still have to be justified for having direct and substantial hidrance to market access.

AG Maduro in Alfa Vita[xvii] also stressed market access. He brought to the attention three criteria to be used when deciding on application of Article 34 TFEU. First, discrimination based on nationality must be prohibited. Second, the imposition of supplementary costs on cross-border activity has to be justiﬁed. Lastly, the measure will be a hidrance to market access if it impedes to a greater extent access to the market and putting into circulation of products from other Member States than trade on national market.

However, other authors do not see much use in notions such as ‘substantial barrier’ or in introducing other types of treshold. They claim that this would introduce an unwanted de minimis test, while ‘barrier to market access’ criterion is inherently nebulous[xviii]. Even if it is possible to distinguish restrictive rules that have minor effects on intra-EU trade, such as ‘modest effect on sales’,‘purely hypothetical and totally uncertain and indirect effect on market access’[xix], a large grey area is left between ‘minor’ and ‘substantial’.

Use restrictions, Keck and market access

Following Moped trailers[xx] and Mickelsson & Roos[xxi], the contours of Keck seem even more blurred and, again, subject to various interpretations. Both cases were related to the limits of market access and restriction of use – prohibition of towing the motor trailers and prohibition on use of personal watercrafts respectively.

These cases reveal the complexity of the question. AG Bot in Moped trailers case argued that the extension of Keck to measures regulating the use of goods would run against the aims of the internal market. AG Kokot, on the opposite, in Mickelsson & Roos suggested to extend Keck criteria to the use arrangements due to comparable characteristics.

In Moped trailers CJEU re-defined the notion of barriers to intra-EU trade underlining the market access. It stated that “any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by the [measures having equivalent effect] concept“. The Court reaffirmed this market access formula in Mickelsson & Roos.

Some authors guessed that with this case law the Keck selling arrangements doctrine might have been consigned to history books: though the Court did not openly overrule Keck, the market access formula might suggest, in fact if not in law, the end of the Keck dichotomy[xxii]. The Court made clear that any measure which may impede access to the market falls under Article 34 TFEU. Although distinguishing product-related rules remains necessary, delimitation of selling arrangements looses significance.

It is, however, a bit suprising that the suggested test established no type of threshold or qualifiers to be met by national measure. On the other hand, as noted by prof. Snell, the CJEU seems to focus on the significance of the impact of the measure with all the uncertainties this approach entails, though at the same time refusing to clearly state that rules with insignificant effect fall outside the Treaty[xxiii].

Concluding remarks

Looking from the other side, confronting Keck and market access test, we might be looking for opposition where it does not exist. Keck is about market access. As stated by Wenneras & Boe[xxiv], the CJEU in Moped trailers and Mickelsson & Roos has just consolidated and clarified what was implicit in Keck, namely that Article 34 TFEU prohibits measures that discriminatorily, in law or in fact, restrict market acess for imported products or which prevent/hinder market access.

Nevertheless, it is often hard to identify, which of the elements plays the decisive role in CJEU judgements – market access, discrimination and protectionism, economic freedom. One can have an impression that those tests remain elusive and are often used in an intuitive way, after firstly looking whether discrimination could be established, having in mind the possible justification in certain case and combining this intuition with the general feeling of what is reasonable and logical.

[vi] Case C-391/92 Commission v Greece [1995] ECR I‑1621, Case C-387/93 Banchero [1993] ECR I-1085. It is worth noting, that restrictions related to where the product might be sold are captured by selling arrangements if they relate to restrictions on physical location of selling place (pharmacy-shop-district). Selling by internet is given a different treatment. In DocMorris (C-322/01, [2003] ECR I-14887), case concerning prohibition of selling medicines by virtual pharmacies, the CJEU hold the restriction to be de facto discrimination against imports. Internet provided a “more significant way” to market access for sellers established in other Member States.

[xiii] It is interesting to note, that AG Jacobs in general tends to analyse measures in the light of the scope of their effect. Criticizing locus standi in annulment actions (UPA case), he also suggested a test of “substantial negative effect” for interpretation of individual concern.